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What Do Analysts’ Estimates for Agnico Eagle Mines Reflect?

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Oct. 22 2018, Updated 8:00 a.m. ET

Factors impacting Agnico’s estimates

Agnico Eagle Mines’ (AEM) operating performance in 2017 was quite strong. Rising 10.0%, its stock almost matched the benchmark gold miners’ index’s (GDX) performance. In 2018, however, it has been weaker.

By October 11, it had lost 19.1% of its value YTD (year-to-date), while the VanEck Vectors Gold Miners ETF (GDX) had fallen 14.5%. Among senior and intermediate miners (GDX)(GDXJ), Newmont Mining (NEM), AngloGold Ashanti (AU), Barrick Gold (ABX), and Goldcorp (GG) have performed better than AEM.

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Analysts’ revenue estimates

Analysts expect Agnico Eagle’s revenues to fall 1.7% YoY (year-over-year) in 2018 to $2.2 billion, mainly due to the company’s production being expected to decline. Agnico’s growth projects are expected to kick in after 2018, which should drive production growth in 2019 and beyond.

Analysts expect AEM to see revenues of $2.35 billion in 2019, implying YoY growth of 6.7%, and revenues of $2.77 billion in 2020, implying an impressive YoY growth of 17.6%. Investors should also note that Agnico Eagle Mines’ project pipeline is one of the strongest in the gold sector.

Earnings estimates

Agnico expects AEM’s EBITDA to decline by 14.4% to $794.0 million in 2018. The huge decline in its EBITDA is due to the company’s rising costs for 2018. As with its revenues, the company’s profitability is expected to climb in 2019 and onward.

Analysts expect Agnico to see EBITDA of $1.0 billion in 2019 and $1.2 billion in 2020, implying YoY growth of 26.5% and 18.3%, respectively. The increasing margin expectations are due to declining costs as its revenues expand. AEM’s upcoming projects should have lower costs than its current average costs, which could help its margins going forward.

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